WASHINGTON — The Obama administration has decided to release 30 million barrels of oil from the U.S. Strategic Petroleum Reserve as part of a broader international effort to pump more than 60 million barrels onto the world market over the next month.
U.S. Energy Secretary Steven Chu said the release of oil is a response to oil supply disruptions caused by turmoil in the Middle East and North Africa, including Libya.
The administration said the uprising in Libya has resulted in a loss of about 1.5 million barrels of oil a day. The release comes as the United States approaches a period of high energy use in July and August.
Why is he doing this? Gas prices are already coming down. Secondly, once the Treasury stops buying bonds (QE2), commodity prices should fall. An analysis of why from FXTrader.com titled, “Good Bye QE2. The commodity bulls will miss you.” And finally, Americans are expected to drive a lot less this summer. Dow Jones:
Nearly 1 million fewer Americans will travel by automobile over the July 4 holiday than a year ago due to high gasoline prices, a survey by travel group AAA released Wednesday show.
Car-travel over the holiday period will drop 2.7% from a year ago, with 32.8 million Americans hitting the road between June 30 and July 4, down from 33.7 million a year ago. This year’s figure is down from the record 35.1 million auto travelers hit in 2002, 2005 and 2007, but above the recession-hit 2009 low of 26.7 million travelers. Still, auto travel will make up 84% of total holiday trips.
To summarize: Demand for gas is already falling, pre July 4th. The Treasury’s inflationary policies will end, making gas cheaper. And finally, there’s not expected to be any great surge of drivers to increase demand over the important July 4th weekend.
So, tell me how President Obama releasing oil from the SPR is anything more than a stunt allowing him to take credit for falling gas prices — when they would have fallen anyway?